Aviva to axe 2,000 jobs worldwide as cost cutting continues

The UK’s biggest insurer Aviva is planning to axe around 2,000 jobs worldwide it emerged today as new chief executive Mark Wilson continues to carry out the strategy outlined and begun by chairman John McFarlane last summer.

Aviva said the job reductions were part of a programme to reduce costs across the business, including 'substantial non-people related savings.'

As yet it is not clear where the job cuts will occur but roughly half Aviva’s 30,000 strong workforce is based in the UK.

Job cuts: Aviva is making 2000 job cuts as it continues to look for £400million of savings across the business.

One City analyst said they expected the majority of the cuts to occur in Britain. Last year Aviva announced 800 jobs cuts in the UK.

The Norwich-based insurance group also announced that from next year, redundancy pay in the UK will be halved from four weeks per year of service to two.

The jobs cuts follow a turbulent year for the insurer, which embarked on a £400million cost cutting programme last summer after becoming bloated under the leadership of previous CEO Andrew Moss, who was savagely criticised last July by Mr McFarlane over his stewardship of insurer.

In December, it sold its US life insurance business Aviva USA, after six years of ownership for £1billion making a £1billion loss on its original 2006 acquisition of what was then AmerUS.

Mr Wilson took the helm at Aviva in January after a lengthy search for a new leader of the insurance giant following the departure of Mr Moss, who was ousted as part of last year’s ‘shareholder spring’, which claimed the scalps of a number of prominent corporate leaders on both sides of the Atlantic.

Yahoo CEO Tim Armstrong, Trinity Mirror CEO Sly Bailey and the boss of pharmaceutical giant AstraZeneca David Brennan all lost their jobs.

Mr Wilson, who was CEO of American International Assurance during Prudential's botched $35billion attempted takeover three years ago, has already made several changes to his senior management team since taking over.

And last month he was force to cut the dividend payment to shareholders by a quarter to 19p per share – a move which saw Aviva’s share price plunge 12 per cent – as the insurer announced a losses of £3billion after tax for the year.

Shore Capital insurance analyst Eamonn Flanagan said given Aviva’s previously stated aim of selling its remaining Asian businesses very few of the job cuts were likely to occur there.

He added: ‘The big fear is when does Aviva stop cutting away the fat and start tearing into muscle?‘

Aviva said in a statement: ‘Aviva has also communicated today that it has reviewed its employment policies and practices to ensure that they are effective and competitive in today's market environment.

‘As a result, Aviva has decided to introduce a revised redundancy policy for all employees on UK contracts. This will bring Aviva's redundancy terms in line with market practice in the UK which will remain significantly above the statutory provisions.

‘Importantly, the changes to redundancy terms will be implemented in two phases so that those impacted in the next six months will still receive the current four weeks' redundancy pay for each year of service. This is intended to minimise the impact on employees and follows consultations with Aviva employee forums and Unite.’

Mr Wilson said: ‘I know this is difficult news for our employees but these changes are essential if we are to remain competitive.

‘Aviva needs to become a more efficient and agile organisation to unlock its potential. We must take tough decisions on costs to provide our customers with great value products and ensure our future success. I am determined that Aviva gets through this phase of our business transformation as quickly as possible.’

Unite union national officer Dominic Hook said: 'Once again finance staff are being forced to pay the price for boardroom failure. Aviva has also announced plans to slash redundancy pay, with longer serving staff losing more than a quarter of their entitlement.

‘To cut redundancy pay so drastically when there is deep uncertainty over job security is a callous and disgraceful act.

‘Since the departure of chief executive Andrew Moss less than 12 months ago, the UK workforce, which is the backbone of the company, has suffered job cuts, pay freezes and now faces an attack on their redundancy terms, when the company is planning more cuts.’